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February 22, 2021 5:45 PM, EST

Yellen Favors Higher Company Tax

Treasury Secretary Janet Yellen by Shawn Thew/EPA/Bloomberg NewsTreasury Secretary Janet Yellen by Shawn Thew/EPA/Bloomberg News

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Treasury Secretary Janet Yellen said President Joe Biden favors boosting taxes on companies, and signaled openness to considering raising rates on capital gains, while steering clear of a wealth levy.

“A wealth tax has been discussed but is not something President Biden” favors, Yellen said at a virtual conference Feb. 22 hosted by The New York Times. She said such a tax would have significant implementation problems.

The administration is looking to boost the corporate tax to 28%, Yellen said. The Treasury chief said last week that revenue measures would be needed to help pay for Biden’s planned longer-term economic reconstruction program to help address concerns about debt sustainability.

Yellen also said that a hike in the capital-gains tax might be something “worth considering.” Asked about a financial-transactions tax, she said, “One would have to examine closely what effect it would have” on ordinary investors.

Turning to climate change, which is set to be a new focus for the Treasury, Yellen said the department may be able to help coordinate climate-related stress tests on banks and insurers — through the Federal Reserve or other regulators.

The Fed already conducts tests to address vulnerability to economic or market downturns, and uses the results as a basis for financial institutions’ capital requirements. Any climate-related tests aren’t expected to have the “same status in terms of limiting payouts and capital” as the regular assessments, Yellen said.

Asked whether the Treasury would consider issuing a 100-year bond to take advantage of low yields, Yellen noted that the government already sells long-term debt. While the Treasury could look again at new securities, market professionals think the demand for a 100-year bond “would be very tiny.” It would “probably be a very thin market,” she said.

While bond yields have climbed lately — in part on expectations of Biden’s $1.9 trillion stimulus proposal passing Congress and stoking economic growth along with faster inflation — they remain historically low. Ten-year Treasury yields hit 1.39% on Feb. 22, the highest since last February but still well below the 3.13% average over the past two decades.

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